News & Views

Alongside its major role in improving revenue collection to backstop the Duterte administration’s high–and inclusive–growth agenda, the Bureau of Customs (BOC) also needs to fully modernize its systems and processes to better facilitate trade, fight smuggling and bar the entry of illegal drugs and terrorists from the country’s borders, according to Finance Secretary Carlos Dominguez III.

Dominguez said the BOC needs to transform itself into “a truly modern bureaucratic organization,” given that the agency and the Bureau of Internal Revenue (BIR) are the two primary revenue tools that the government relies on to support its growth strategy anchored on massive public investments in infrastructure, human capital and social protection for the poor and other vulnerable sectors.

This ambitious spending plan will require immense revenue inflows on top of the official development assistance that the government expects to get from other countries in the medium term, he said.

“The role of the Bureau of Customs is more than just improving revenue collection to provide government the wherewithal to fund public investments. We expect the Bureau to continuously improve its procedures and processes to facilitate trade. This is important in building an investments-led growth that will produce employment opportunities for our people,” Dominguez said at the BOC’s Command Conference held at the Marble Hall of the Ayuntamiento de Manila.

Dominguez said agencies like the BOC and the BIR do not actually collect for the government, but “for the people of the Philippines,” with the State only allocating how the taxes and duties it collects would be spent.

“So when people are cheating and not paying their right taxes or duties, they are not cheating the government, they are cheating the Filipino people. So you are the guardians of that. You should keep that in mind, that these funds don’t belong to the government, they belong to the Filipino people. We are just entrusted to collect it and to allocate it … You are collecting on behalf of the Filipino people,” Dominguez told BOC officials and employees.

The BOC has reported that it collected P104.9 billion in taxes in the first quarter of 2017, exceeding the P104.28 billion target for the period.

It expects to collect P468 billion this year, up from the 2016 level of P396.37 billion.

Dominguez said he expects the BOC not only to help raise revenues and facilitate trade but to likewise protect Filipinos from the entry of illegal drugs, substandard products and other harmful commodities.

“The Bureau occupies a primary place in our border security. Porous borders are the delight of all sorts of menacing elements: smugglers, drug traffickers, gunrunners, terrorists and the like,” Dominguez said.

He pointed out that smuggling, besides denying the government the potential revenues it deserves, also leaves the country open to the flow of illegal drugs and makes our borders defenseless against terrorists.

“In order to meet the many expectations placed upon the Bureau, we need a truly modern bureaucratic organization. It is one that summons the powers of new information technology not only to speed up processing but also to properly monitor pricing. Innovating our organization is an endless but fruitful pursuit. I hope you will be up to the task of constant innovation with a passion,” the finance chief said.

Dominguez said all BOC officers and employees play “an important and patriotic role in this government’s effort to liberate millions of Filipinos from poverty” as their ability to collect taxes “is important to ensuring fiscal stability as we embark on an ambitious strategy to bring our economy to a higher plane of growth.”

This growth strategy will provide the means that would enable the government to bring down the poverty rate from 21.6 percent in 2015 to only 14 percent by 2022, Dominguez said.

The Duterte administration also aims to transform the country into a high middle-income one by 2022 and to a high-income economy in one generation or by 2040.

On top of improving revenue collections, Dominguez said the approval of the first package of the Comprehensive Tax Reform Program (CTRP) is crucial to the financial viability of the Duterte administration’s higher public spending policy because it aims to correct the tax system’s “inherent flaws, such as non-indexation to inflation of the tax rates and the large scope of exemptions and special treatments that complicates tax administration.”

House Bill No. 5636, the CTRP’s first package also known as the Tax Reform for Acceleration and Inclusion Act (TRAIN) aims to lower personal income taxes for compensation earners along with expanding the tax base by limiting VAT exemptions to raw food, education and health and those enjoyed by seniors and persons with disabilities; adjusting the excise tax rates for fuel and automobiles; and taxing sugar-sweetened beverages (SSBs), among other measures.

The House of Representatives approved the CTRP’s first package—HB 5636—by a 246-9 vote with one abstention last May 31 before the Congress’ sine die adjournment.

Dominguez earlier warned that “If we fail to raise the volume of revenues required for our economy to break out over the next few years, we will fail in everything else. We will fail to close the infra gap. We will fail to make the investments in our young to prepare them for meaningful economic participation. We will fail to catch up with our neighbors in the region who have invested twice of the amount than what we did on infra over the past three decades. Most important, we will fail to bring down the level of poverty afflicting our people.”